Nigeria’s a Mess — But Don’t Blame the Oil
The Financial Times recently reported on the dismal state of oil sector performance in Nigeria:
“Nigeria is suffering the worst oil production disruptions in four years, with output falling to levels last seen before the government’s amnesty program ended the militancy in the Niger delta.
Industrial scale oil theft, sabotage, and technical problems have caused crude output to drop to less than 1.9m barrels a day this summer, the lowest since mid-2009, when production briefly dipped to a 20-year low of 1.5m b/d. Any further fall would allow Angola to assume Nigeria’s position as the continent’s largest crude producer.”
According to the FT, theft and sabotage are big problems there:
“More than 150,000 barrels of oil are reportedly stolen every day, with some feeding illegal refineries in the Niger delta and the bulk shipped to destinations as far away as Asia. The Nigeria Extractive Industries Transparency Initiative said in July that the country had lost $10.9bn in potential oil revenues to theft and sabotage from 2009 to 2011 — before the problem reached its current scale. By last year, losses had increased to $1bn a month, according to the government.”
This comes as little surprise: The Fraser Institute publishes an annual report based on a survey of executives in oil exploration and production, asking them to evaluate the jurisdictions in which they operate on a broad range of policy factors such as the area’s tax policy, royalty regime, regulatory regime, labour availability, and much more. The goal of the study is to assess how the public policy environment in a given jurisdiction makes it more or less attractive to investment in the oil and gas sector. Read More